Europe

Economic crisis deepens in Russia as Ukraine military stand-off continues

Since the beginning of October, following a ‘request’ to intervene by
the Assad government, Russian jets have been completing over 60 bombing
missions a day in Syria, purportedly on ISIS positions. On 7 October,
Russian navy ships in the Caspian Sea fired 32 cruise missiles again at
targets in Syria. Western intelligence reported four of these fell short
in Iran but both Russian and Iranian foreign ministries deny this.

For Russian domestic consumption this is presented as an attempt to form
“the widest possible coalition against extremism and terrorists”. The
spectre is raised by President Putin of the dangers of the return home
of some 7,000 Russian citizens fighting for ISIS. Russia Today, the
Kremlin’s international media outlet, however openly boasts that the
intervention “has in just a couple of weeks changed the balance of
forces in the Middle East… Moscow has seized the initiative not only
militarily, but also on the diplomatic front… Russia has thrown down an
unprecedented gauntlet to the White House, this has forced many of US’s
allies to the conclusion, that Washington is losing interest in the
region and is ready to accept the growing influence of Russia and Iran”.

Whilst covering the numerous cases of “collateral damage” inflicted
during US and allied airstrikes, the Russian media depicts its own
attacks as highly targeted, with the successful annihilation of numerous
ISIS bases. ISIS is a reactionary organization that the international
workers’ movement and socialists must oppose but never in the Russian
media do we hear any explanation about the anger and desperation that
drives people into supporting it.

Nothing indicates the Russian campaign will be any more successful than
the US led campaign and lead to a decline of terrorist attacks in Russia
and elsewhere. The reality is that Russia’s intervention is driven by
wider objectives than simply destroying ISIS.

The Kremlin has seized the initiative from US imperialism in Syria. In
2013, Russia intervened over the western allegations of Assad’s use of
chemical weapons, averting the then planned US airstrikes. The US/EU
strategy, based on removing Assad and leaving the opposition forces in
control, led to a sectarian nightmare, with more than ten different
groups and militias [dozens of groups in 2015], mainly supported and
financed by the West and reactionary Arab regimes, such as Qatar and
Saudi Arabia, fighting for control.

Russia invited Assed to Moscow to discuss further plans. By supporting
its long-time ally and economic partner, Russia strengthened those
within the Western imperialist camp who argue that Assad should be
included in negotiations, in opposition to the US and UK who want to
exclude him.

The majority of Russian air-strikes are in support of Assad’s military
operations, particularly around Aleppo, and to further the interests of
the so-called “anti-terror coalition”, essentially an anti US-coalition
across the Middle East. Inherent in this situation is the possibility of
a proxy war between Russia and the West. But very unwilling itself to
send significant numbers of ground troops to Syria, Russia is
coordinating its air activities not just with Assad’s generals but with
Iran and Lebanon’s Hezbollah – both providing a large number of ground
troops. According to one Free Syrian Army commander from Aleppo: “The
Russians showered us with bombs even in the civilian areas. They want to
clear everything so the regime’s tanks and even foot-soldiers can
advance.” These attacks benefit not just the Assad regime, but help
ISIS, claims another FSA advisor: “The regime and Isis tried to take
Aleppo last year and they couldn’t, and now they are trying again with
the Russians. The Russians are doing Isis a huge favour. They are giving
them air cover while they are attacking us from the ground.”

Iran

Top Iranian commander Soleimani began to visit Moscow in July, in part,
it seems, to bolster Russian determination to oppose further
encroachments of anti-Assad forces towards the Mediterranean coast,
which not only undermine the Assad regime, but also threaten Russia’s
naval base at Tartus. Russian representatives met the Iranians and there
has been a spate of diplomatic meetings with a seemingly unlikely ally,
Saudi Arabia. The two sides signed a nuclear cooperation pact and the
Gulf state will invest $1billion in the Russian economy. High level
meetings between President Putin and King Salman are scheduled for later
this year. Saudi Arabia is concerned that ISIS expansion has to be
curtailed and is uneasy at the recent US-Iranian agreement. The Saudi’s,
concerned at growing Iranian influence in the region, want to proceed
with intervening in Yemen.

Another very important factor underlies the apparently strengthening
friendship between Russia and Saudi Arabia – oil prices, which are
currently low partly due to the Saudis attempting to hamper competing US
shale oil production. The Saudis invited Russia to join OPEC, seemingly
with the aim of consolidating a block of oil interests capable of
resisting US producers.

Russia is desperate to increase the oil price, so much so that some
commentators talk of panic in the Kremlin. One former insider, Gleb
Pavlovskii, compares it to "the music of a jazz group; its continuing
improvisation is an attempt to survive the latest crisis." Another says
the elite is in crisis: “They can’t live with Putin. And they can’t live
without him.”

Russia has no clear way out of the current economic crisis. In recession
since January, GDP is expected to fall by 4-5% by year end and the
government expects the recession to last until the end of 2016.
Unemployment statistics dramatically understate the real situation but
even so the number out of work has officially increased by 13% this
year. Inflation continues at high levels. For the first time in 17
years, there has been a decline in real incomes, by 10% in the large
cities and reportedly by over 25% in rural areas.

Although the state-controlled media hide it, there is discontent. While
the independent trade unions dispersed mass anger over health and
education cuts at the end of 2014, the year still saw the highest number
of protests since the start of the global crisis in 2015.Significantly
most protests take place without any participation by the so-called
opposition parties, such as Just Russia and the Communist Party or
existing trade union structures.

Both domestic and external factors drive the Russian economy down. The
energy sector accounts for 98% of all corporate profit and, despite
sanctions and falling oil prices, has maintained this level because
ruble devaluation has compensated losses. These profits are not
reinvested in new production for fear of further reducing the oil price.
Meanwhile the 700 top companies that produce 78% of Russia’s output have
seen their debts escalate by two-thirds this year. The banks are
reluctant to invest because they see no demand. The dramatic collapse of
the Chinese stock market and currency instability make the prospects for
the Russian economy gloomy. The likelihood is, according to gazeta.ru,
that 2016 will be the year of “no money, no growth”. With no solution,
the ruling elite are retreating to their fall-back strategy of just
hanging on in the hope the crisis does not last too long.

Kremlin popularity

Kremlin popularity still benefits from the accession of the Crimea and
the Syria intervention, in the words of one commentator, has been a
“further dose of anaesthesia”. In the past, some sections of society in
Russia prepared to ‘accept’ restrictions on democracy in exchange for
improving living conditions. But now that living standards are eroded,
criticism is directed at the lower levels of the ruling elite. According
to the Levada research organisation, over half the population think
Putin does not know the real situation in the country or that his
entourage is lying to him to hide the truth. The ruling elite are
clearly concerned and resorting to the whipping-up of anti-US and
anti-Western moods.

Initially, the Kremlin argued that their anti-terror coalition would
even extend to the US, an illusion that was dashed as airstrikes started
hitting the pro-Western opposition. The Putin regime hoped that
participation in the campaign against ISIS would lead to the lifting of
sanctions and divert attention from the Ukraine.

Although tensions between Ukrainian government forces and the rebel
Lugansk and Donetsk republics grew to dangerous levels in the summer, a
new ceasefire has more or less held since early September. The Kremlin’s
original strategy of creating “Novorossiya” (the expansion of the
break-away republics over south and east Ukraine) was abandoned in
August 2014 after Ukrainian forces made serious advances towards
Donetsk. Since then, the Kremlin’s intervention has supported the
rebel-controlled regions (proxy Russian territories) within Ukraine, to
counter any further moves by the Kiev regime towards NATO or the EU. The
costs of political and economic isolation, as well as the fear of growth
of opposition at home, held the Kremlin back. A further purge of the
republic’s leadership to ensure its compliance with Moscow took place in
September.

Ukraine’s social and economic disaster is approaching, if not quite
reaching the depths experienced after the collapse of the Soviet Union
in the early nineties. The hryvnia is the world’s second worst
performing currency, ahead only the Belarussian ruble. At least this was
the situation before the Chinese crisis. This reflects the collapse of
the Ukrainian economy, which suffered a staggering 15% fall in GDP over
the past year (According to the World Bank, Ukraine’s GDP fell 35% since
independence).

President Poroshenko’s support fell dramatically. Elected with 54% of
the vote a year ago, polls now give him just 15%. Voters are
disappointed that he did not fulfil his promises to sort out the problem
of the breakaway republics within days or to give up his business
interests. His proposals to increase “decentralisation” do not go far
enough to satisfy the leaders of the break-away republics while, at the
same time, are seen by the hawkish forces in Kiev as giving too much of
a concession.

Despite the ceasefire, voices demanding more decisive action to isolate
the break-away republics are still being heard. The parliamentary leader
of Poroshenko’s party, who recently called for a full blockade of the
two republics, resigned over the summer. Leonid Kuchma, Ukraine’s
president in the 1990s, calls for Ukraine to “sever all economic and
political relations with these regions controlled by the militants and
Russia”. In effect, he’s advocating that the republics should be starved
into submission. In addition, a conflict between the far-right and the
Poroshenko government has come out into the open. A recent armed
conflict between the Right Sector and the police in West Ukraine over
control of the black market and the refusal of the right wing battalions
in east Ukraine to withdraw, make a long-term compromise very difficult.

Potential to build an alternative

Although it may seem that there is a world of difference between the
situations in Ukraine and Syria, the reality is that there is far more
in common. In Ukraine and Syria, the military actions of the
authoritarian regimes and local warlords, backed by NATO, Western
imperialist and Russian military forces, are causing immense suffering
to working people. The economic crisis that affects Russia is made worse
by the demands for austerity and budget cuts, fuelling poverty,
corruption and despair.

But there is also potential to build an alternative to this nightmare:
the Ukrainian and Russian working classes are amongst the biggest in
Europe and are both suffering from dramatic attacks on their rights and
living standards. If the working class was to move into action to
prevent wage cuts, jobs losses and budget cuts, it would inevitably also
face the need to oppose the authoritarian policies of the ruling elite.
Such a struggle based on united action would also mean that in those
areas affected by the military conflict the working class would form
joint workers’ committees uniting all nationalities to oppose
imperialist intervention and force the withdrawal of all foreign forces;
to enable working people to decide their fate in open, fair and free
elections, supervised by elected, democratic workers’ committees; to
guarantee the national and democratic rights, including the right of
self-determination, with the building of independent trade unions and
mass workers’ parties capable of implementing a programme of land to the
masses and the factories to the workers, through a programme for a
socialist democratic planned economy, under a democratic and voluntary
socialist confederation of the region.